Afternoon:
14°c
ECB chief in warning as rates are held
04.09.08
European Central Bank President Jean-Claude Trichet today sounded an inflation warning as central banks in Europe and Britain left interest rates unchanged.
The ECB kept the benchmark rate at 4.25% while the Bank of England pegged its rate at 5% for a fifth month in a row. Trichet underlined the dilemma facing policymakers on the Continent and on Threadneedle Street as they battle runaway inflation at a time of stagnant economic growth.
The Bank of England in particular is under pressure to cut rates soon to kick-start the economy but has resisted since the last cut in April because inflation is on the up.
Trichet today said: "Upside risks to price stability prevail. We're resolute in our determination to keep inflation expectations in line with price stability."
The ECB also cut its economic growth forecasts for this year and next.
